Revisiting the Relationship Between Natural Gas Consumption and Economic Growth in Turkey

Abstract

The objective of this study is to re-analyze the relationship between natural gas consumption (NGC) and economic growth (GR) for Turkey in a multivariate framework by including capital and labor as additional variables because several papers suggest that a bivariate model can suffer from omitted-variables bias. As compared to the findings of Isik (2010), who previously investigated the short-and long-run relationships between GR and NGC using a bivariate model, we find that the magnitude of the coefficient estimate of NGC become substantially smaller in the long-run and the sign of short-run estimate of NGC shift to negative after accounting for capital and labor as well. In addition to that covered by Isik (2010), we investigate the direction of causality between GR and NGC using the vector error correction model Granger causality approach, and reveal the evidence of feedback hypothesis for Turkey.